formalities – corporations Flashcards
pre-incorporation acts
general rule as to corporation liability for pre-incorporation acts
corporation generally not liable for pre-incorporation acts
pre-incorporation acts
when is a corporation liable for pre-incorporation acts
if they ratify the agreement
* explicit –board adopts a resolution agreeing to be bound by agreement
* implied – conduct; accepting the benefits of the agreement
formation
how is a de jure corporation formed
- articles of incorporation
- affidavit of acceptance of the corporation’s registered agent
both of these must be filed with the SOS
formation
how is a de facto corporation formed
formed when there’s a good faith attempt to create a corporation, but there was some omission
the court may still treat the corporation as having been formed where the equities of a particular situation so merit
formation
what must the articles of incorporation include
- name of the corporation
- number of shares the corporation is authorized to issue
- street address of initial registered office, and if different, the street address of the initial principal office
- the name and street address of the initial registered agent
- the name and address of each incorporator
formation
what is the effect of the articles of incorporation including a narrow business purpose
the corporation may not undertake activities unrelated to the purpose
formation
what can the articles of incorporation include
other provisions relative to managing the business and regulating the affiars of the corporation
formation
what happens after the articles are filed
the initial directors (or incorporators if no directors named) will hold an organizational meeting to adopt bylaws, elect officers, and transact other business
formation
what can the articles of incorporation include
other provisions relative to managing the business and regulating the affiars of the corporation
formation
what can the bylaws include
any provision for managing the corporation that is not inconsistent with law or the article of incorporation
formation
how are bylaws adopted
adopted by directors, but can be modified or repealed by either directors or shareholders
formation
what can the shareholders provide in relation to a bylaw
a particular bylaw adopted or amended by them may not be repealed or amended by the directors
formation
what is required for any bylaw adopted
must be consistent with the articles
stock certificates
who is required to issue stock certificates
business corporation are required to issue, unless the corporation is a participant in the Direct Registration System of the Depository Trust and Clearing Corporation or of a similar book-entry system used in the trading of shares of public corporations
stock certificates
what is the consequence of failing to issue stock certificates
requirement is a duty imposed on the corporation – shareholders are not penalized if they don’t receive stock certificates
stock certificates
what must be included on the stock certificate
- the name of the corporation and that it is organized under the laws of this state
- the name of the person to whom it’s issued
- the number and class of shares and the designation of shares, if any, the certificate represents
- the president and secretary’s signatures, or the signatures of two officers designated in the bylaws or by the directors
proxies
what is the general rule as to proxies for directors
generally, directors must be physically present at a meeting to vote; to allow proxies, the articles must provide for it
proxies
what are the limitations imposed on proxies for directors
- director may only appoint a fellow board member as his/her proxy
- proxy is only valid for one meeting (articles can provide for longer appointments, however)
proxies
what is the general rules for proxies for shareholders
able to vote either in person or by proxy with no special authorization required
proxies
who may the shareholders appoint as a proxy and what is the process
- can appoint any other person and are not limited to appointing fellow shareholders
- appoint in writing or electronic transmission by shareholder
- effective upon receipt by the individual authorized to tabulate votes
proxies
are proxies revocable or irrevocable
- generally, revocable by shareholder and valid for 11 months from the date of granting (possible to alter both of these)
- to be irrevocable, the appointment form must conspicuously state that it is irrevocable, and the appointment is coupled with an interest
proxies
how does a shareholder revoke their proxy designation
- in writing
- by shareholder’s presence at the meeting to vote for him/herself
- by subsequent appointment of another proxy
written consent
how do directors generally act at meetings
through actions taken
written consent
how can directors take action through written agreement at a meeting
must unanimously be signed by the directors
* note: this requirement cannot be altered
written consent
how do shareholders generally act at meetings
through votes taken
written consent
how do shareholders act without a meeting
all shareholders entitled to vote on the matter must sign a written consent
* articles can include a provision reducing the unanimity requirement
annual report
if the corporations fail to file the annual report, what is the potential consequence
termination (potentially)
meetings
how often must meetings be held
annually
meetings
what is the shareholders’ remedy for requesting an annual meeting
if no meeting is held for 18 months, any shareholder can demand that the secretary call for a meeting to be held at the registered office
meetings
who may call for a meeting
any shareholder individually, but none of them are required to do so (unless the secretary is a shareholder)
meetings
what are the notice requirements
- must be given at least 10 days but not more than 60 days before the date of the meeting
- must contain the time, date, and place
- if the meeting is a special meeting, then the purpose of the meeting must be included as well
meetings
how do shareholders waive the notice requirement
- doing so in writing either before or after the meeting
- merely showing up at the meeting and not objecting to lack of proper notice
meetings
what are the requirements for rescheduling a meeting
same as those required to schedule a meeting; possible to avoid giving a second notice relative to a reschedueld meeting if the rescheduling happens at a meeting already convened
records
what are the first four types of records the corporation must keep at its principal office
- articles or restated articles of incorporation and all current amendments
- bylaws or restated bylaws and all current amendments
- resolutions adopted by the board creating one or more clases or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding
- minutes of shareholders’ meetings, and all actions taken by shareholders without a meeting for the last 3 years
records
what are the second four types of records the corporation must keep at its principal office
- all written communications to shareholders within the past 3 years (including financial statements)
- a list of the names and business addresses of current directors and officers
- most recent annual report delivered to SOS
- any unanimous governance agreement in effect
veil piercing
what does veil piercing allow
reach the personal assets of a shareholder, director, officer, etc.
veil piercing
who generally can pierce the corporate veil
creditors
veil piercing
what are the methods through which veil piercing is appropriate
- commingling member and corporate funds
- inadequate capitalization
- failure to maintain a separate identity
formation
what can the articles of incorporation include
other provisions relative to managing the business and regulating the affiars of the corporation
